Outsider CEO is fired for lack of experience

January 24, 2006|By BLOOMBERG NEWS

BEAVERTON, Ore. -- William D. Perez quit as the first outsider to run Nike Inc. after founder and Chairman Philip H. Knight decided he didn't have the experience for the job and was hurting the company's performance.

Perez, the former S.C. Johnson & Son Inc. executive who became Nike chief executive officer a year ago, wasn't able "to get his arms around the business," making Nike "less efficient," said Knight.

"The distance between the company Bill managed in the consumer-packaged goods sector and Nike in the athletic-equipment business is too great of a leap for him to make," Knight told analysts and investors during a conference call yesterday. "There's too much difference in the industry, company, brand and culture."

Mark G. Parker, a 27-year Nike veteran, was named to replace Perez as CEO and president of the world's biggest athletic-shoe maker, effective immediately, Nike said. Parker, 50, has worked for Nike in product design, development, marketing and brand management.

Nike spokesman Alan Marks declined a request for an interview with Perez.

"The shake-up is going to be minimal," said Robert Sweet, an analyst at Horizon Investment Services, which has about $85 million in assets including Nike shares. "Mark Parker is a long-term ally of Phil Knight. He knows what the company is looking for. He's not going to rub them the wrong way."

Nike's shares dropped 75 cents to close at $83.45 yesterday on the New York Stock Exchange.

Perez's severance package will include two years of his current salary of $1.4 million, at least $1.75 million in 2006 bonus payments, and $3.6 million to purchase his house in Portland, the company said in a regulatory filing. He received $1.59 million in salary and bonus last year, along with restricted stock awards the company valued at $9.09 million.

Knight said he met with Perez shortly after his one-year anniversary at Nike and told the executive he wasn't the "right person to lead" the company. Perez told Knight he would think about it, and two days later submitted his resignation, which the board accepted Friday, Knight said.

"It was an accumulation of a lot of things over a year," Knight, 67, said. He said he didn't choose either Parker or Nike division President Charles S. Denson when he named Perez because he "felt at the time they both would be better off to learn from an outsider."

The process has been "somehow destructive for the company," Knight said.

Perez said in Nike's statement, "Phil and I weren't entirely aligned on some aspects of how best to lead the company's long-term growth. It became obvious to me that the long-term interests of the company would be best served by my resignation."